BharatPe cofounder Ashneer Grover and his wife Madhuri Grover sent a legal notice to Kotak Mahindra Bank on October 31, 2021, for failing to provide financing in the Nykaa IPO.
Bengaluru:Ashneer Grover, cofounder and managing director of BharatPe, and his wife Madhuri Grover sent a legal notice toKotak Mahindra Bankon October 31, 2021, for failing to provide financing in Nykaa’s initial public offering (IPO).
ET has seen the copy of the notice sent by Grover’s lawyer.
Responding to ET’s query in the matter on Sunday, the Mumbai-based lender said it will take “appropriate legal action” against Grover on this matter.
“This notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Mr. Grover,” the bank said in a statement. “Appropriate legal action is being pursued.” “We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever,” the statement read.
Grover told ET he had no comments to offer. Sumit Agrawal, founder of Regstreet Law Partners who is representing Grover in the case, declined to comment on ET’s queries, citing confidentiality agreements.
“To the shock and surprise of our clients, on October 28, 2021, after having repeatedly assured our clients that the shares of FSN (Nykaa’s parent firm) would be allotted to them, Kotak informed our clients that it would not be able to provide financing for the Nykaa IPO,” Grover’s legal team wrote to Kotak Mahindra Bank in October.
“Kotak’s refusal to comply with its assurances was on the pretext that it had decided not to finance the Nykaa IPO due to ‘erratic FII movements’ and ‘very high lending rates’,” the notice added. According to Grover’s lawyer, Kotak’s “eleventh-hour” denial of IPO financing to Grover cost him a “business/investment opportunity about which they had informed Kotak more than a month in advance of the launch of the IPO”.
Further, the notice also states that Kotak Mahindra Bank’s statement that it has not provided IPO financing to any individual for the Nykaa IPO is blatantly false and incorrect, since the lender has provided the service to Suhail Sameer, the CEO of BharatPe.
In August, last year, Grover moved to the role of managing director of the startup he cofounded in 2018. New hire Sameer was made the CEO of the company. He works closely with Grover, including on matters related to fundraises, people aware of matter have said.
The notice said that Kotak Mahindra Bank must arrange for IPO allotment before the Nykaa issue closes or it will be liable to compensate the BharatPe founder and his wife for losing out on gains he would have made on the Rs 500 crore investment—equally split between the two.
The entire event came into light after an audio clip emerged last week where Grover was found hurling expletives and death threats to a Kotak Mahindra Bank employee for missing out on a margin funding for Nykaa’s IPO. Soon after, Grover took to Twitter calling the viral video ‘fake’. The bank had stayed away so far from commenting on the matter.
Margin funding, also known as IPO financing, is essentially a short-term loan provided by certain lenders and brokers to high net-worth individuals.
The authenticity of the audio clip has not been independently verified by ET. Grover received a major backlash from the wider startup community for his alleged conduct and language in the audio clip.
In his response on Twitter on Thursday, Grover said that “some scamster” was trying to extort $240,000 in bitcoins from him using this clip, after which he deleted his tweet on Friday. Responding to ET’s queries on Saturday, Grover said that he deleted his tweet since the audio clip was deleted from Twitter as well as Soundcloud. There was no point keeping the tweet anymore on his Twitter profile, he added.
Over the past year, Grover and BharatPe have also been embroiled in a public spat and legal battle on the ‘Pe’ suffix with rival PhonePe, owned by Flipkart.
BharatPe is one of the well-funded fintechs in the Indian startup ecosystem. It recently raised $370 million from New York-based Tiger Global and others at a valuation of $2.85 billion.